Question 6

The more 'squarish' (L-shaped if you prefer) the indifference curve, the more:

Question 6 options:

A.Two goods are complements

B.The more inferior one of the goods is

C.Two goods are substitutes

D.The consumer likes the two goods

Question 7

What would happen if one monopoly had perfect price discrimination? (as in: being able to charge a different price to every consumer)

Question 7 options:

A.The equilibrium would be the same as in perfect competition but all the surplus would go to the monopoly

B.The MR curve would be horizontal

C.The equilibrium would be the same as in perfect competition, including the CS and PS

D.The quantity produced would be even less than without the price discrimination

Question 8

A firm currently produces 100 units of some good. The average cost per unit is $20. If the firm decides to produce one more unit, this average cost will increase. What can you say about the marginal cost of the 101th unit?

Question 8 options:

A.The MC must be greater than the AFC

B.The MC must be more than $20

C.The MC must be less than $20 since there is a negative relationship between the ATC and MC.

D.The MC must be $20 or less

Question 9

Why are profits=0 in the long run in perfect competition?

Question 9 options:

A.Because the opportunity cost is minimized in the long run

B.Because the price is equal to the minimum AVC

C.Because other firms are free to enter the market

D.Because the market is efficient